Calculation of Bonus Illinois Wholesale Company has an agreement with its sales manager entitling… 1 answer below »

 
   

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Calculation of Bonus

Illinois Wholesale Company has an agreement with its sales manager entitling that individual to 7% of company earnings as a bonus. Company income for the calendar year before bonus and income tax is $350,000. Income tax is 30% of income after bonus.

1. Compute the amount of bonus if the bonus is calculated on income before deductions for bonus and income tax.

2. Compute the amount of bonus if the bonus is calculated on income after deduction for bonus but before deduction for income tax.